The House has passed legislation last Thursday to give troubled homeowners a chance to cut mortgage debt through bankruptcy courts. It is challenged by the same industry opposition and reservations from moderate Democrats that nearly overturn the result.

The house vote was 234-191 which approved the measure to help debt-strapped homeowners cut mortgage debt through bankruptcy judges to avert foreclosure.

In the current law, bankruptcy courts may lower debts for struggling borrowers on a boat, car, vacation home or family farm but cannot on a primary residence. The legislation would give bankruptcy judges power to reduce the interest rate and principal on a home mortgages.  It's part of President Obama's housing rescue plan. The House bill has additional provisions aimed to help the real estate industry and hopefully end the slump that has caused the U.S. economy into a deep recession.

Supporters see it as a vital tool to urge banks to negotiate with homeowners for more affordable terms while critics sees a future stream of bankruptcy filings that will push mortgage rates up and make the battered housing market get worse.

The Senate is expected to have its own version of the House bill soon in the coming weeks, but odds of passage are unsure.